Public skepticism of carbon trading schemes is growing and judging by what's happening in California, it is easy to see why. California's race to be the first state to develop a carbon-trading program comes at an unacceptable cost for Sierra forests. This fall the California Air Resources Board (ARB), with prodding from logging companies and the complicity of some environmental groups, adopted a program that allows timber companies to sell CO2 credits for their worst logging practices. But clearcutting has no place in any climate change solution.

Sierra Pacific Industries (SPI) is one of the nation's largest logging companies and California's largest private landowner. At a time when other timber companies are moving away from the practice, SPI embraces clearcutting as part of their core business plan – clearing 20 to 40 acre swaths of forest, then plowing the earth and spreading herbicides like Atrazine to kill remaining vegetation. Naturally diverse forests are replaced with uniform, ‘even-aged' tree plantations that increase fire risk, ruin watersheds, and disrupt natural carbon sequestration in soil and biomass. The earth is left scarred with only scattered debris piles and so-called "ecological islands" – twisted solitary trees left standing on the barren tract. California law allows adjacent tracks of forest to be clearcut every five years, leaving a patchwork of homogenous tree farms where once there was an ecologically diverse forest.

Clearcutting, as practiced by SPI, Green Diamond Resource Company and other timber companies, is the North American version of deforestation. Governor Schwarzenegger, in his speech in Copenhagen in December, called for local action and California leadership in finding solutions to climate change. I agree, but I believe that we Californians need to set a higher bar for leadership, and take a long hard look at ourselves.

The state of California is developing a carbon trading policy through a Byzantine complex of government and quasi-government agencies. The Climate Action Reserve (CAR) is a non-profit carbon-trading broker with strong ties to the Governor, CalEPA, and the Air Resource Board (ARB) – the state agency responsible for regulating carbon emissions. The chair of CAR's board of directors, Linda Adams, is Schwarzenegger's Secretary of CalEPA, which oversees the Air Resources Board.

This intertwined relationship between government and a non-government organization limits transparency and public participation, and allowed the timber industry to cut a backroom deal forcing clearcutting into the carbon-trading program. CAR has assumed the very governmental role of developing carbon-trading protocols, a critical piece of the state's implementation of AB 32, California's greenhouse gas reduction law. They've done this with generous input from industry. The most recent version of the forest carbon trading policy, for example, originated on the computer of a timber industry operative. And last fall the Air Resources Board, which is a state agency, adopted the CAR policy – creating de facto state regulations.

How could this happen? The answer is supply. The carbon market, which is being proposed as the solution to climate change, depends on a ready supply of cheap carbon credits. Without the participation of large private landowners (the largest of which are logging companies), the burgeoning carbon market could fail for lack of carbon sequestration supply. Recognizing this fact, the Schwarzenegger Administration, CAR, ARB, and some environmental groups – desperate to get carbon trading online – were ready to compromise to secure the participation of the timber industry. SPI, meanwhile, is in the business of harvesting trees. So CAR, ARB, and the governor cut a deal to pay SPI for business as usual practices; the timber industry gets their cake, and clearcutting too.

In September 2009 the Air Resources Board voted to accept revisions to CAR's forest carbon trading rules that lay out what land management and logging practices qualify for carbon credits. This protocol allows a landowner to sell carbon credits for reforesting areas recovering from forest fires, preventing conversion of forest lands to housing or farmlands, and improving their forest harvest practices to "promote and maintain native forests." This makes sense. But the protocol also includes provisions that permit landowners to collect credits for clearcutting, termed "even-aged management."

SPI argues that clearcutting actually benefits forest carbon sequestration. It's a cynical argument. Clearcutting releases more carbon than a forest fire, while destroying wildlife habitat and water quality along with it. The intensity of clearcutting – and the disturbance of carbon-storing soils and biomass – releases carbon at levels far greater than less-intensive forms of timber harvesting, such as commercial thinning. However, the CAR trading program ignores these emissions, putting them on a ‘punch list' for future study. Without an accurate accounting of how much carbon is sequestered, the CAR carbon trading policy lacks integrity and is simply a new revenue stream for logging companies that fails to reduce greenhouse gases.

Even though some CAR and ARB board members acknowledged problems with the clearcutting provision this fall, both bodies refused to delay action on the protocols. The reason became apparent soon after the protocols were adopted. In October, Governor Schwarzenegger and SPI jointly announced that the company was embarking on what they described as the largest forest carbon project in the nation's history. The deal, made possible by the new forests protocol, involves 60,000 acres of SPI land in California and will purportedly sequester 1.5 million tons of CO2. The LA Times estimated that the carbon sale could be worth as much as $10 million to SPI.

Supporters for California's carbon trading policy refer to it as the "gold standard" and hope to export it around the nation and around the world. But, in the end, California's carbon-trading policy delivers logging companies a new revenue stream without requiring any changes in their worst forestry practices. What we get is more clearcutting, less carbon sequestration, and a trading policy that discredits the entire concept of carbon offsets. We cannot clearcut our way out of climate change. In fact, we shouldn't allow clearcutting at all.

Eddie Scher is a longtime environmental advocate, writer, and former editor of Waterkeeper magazine.